When I put my jeep into 4 wheel drive all time or 4 lo, it makes a terrible grinding noise while driving. It will shift in and out of 4 wheel fine, but just makes bad grinding noises while driving it in 4 wheel drive? Also I can here a faint grinding noise while driving in regular 2 wheel drive? Sounds like its coming from directly under the middle of my center console and dashboard?

In drive, I let off the brake and begin moving forward.
I then shift the transmission into neutral.
While in neutral, and moving at a slow walking speed, I shift the t-case into 4lo.
Place the trans back in drive.
Have Fun!

Doesn't sound like a shifting issue, as it shifts just fine per the OP. Sounds more like a "once I've shifted it into 4WD, it makes awful noises".

I would say the most likely culprit is the Rzeppa-joint front driveshaft. It's a common failure item. Unfortunately, diagnosing via the internet is pretty difficult. If you aren't confident my diagnosis from 2300 miles away, have a professional take a look. Good luck!